A monthly column written for Beef Central by US meat and livestock industry commentator, Steve Kay, publisher of US Cattle Buyers Weekly

I HAVE reported on the livestock industry around the globe for just over 40 years. I can say with certainty that weather extremes in North America and Australia surpass those of any other continent.

The latter appears to have continuous cycles of devasting drought and devastating wildfires, followed by flooding. North America experiences these extremes as well.

This year is only two months old but they have been tough for US cattle producers. Carcase weights plunged for several weeks after a brutal winter storm swept across much of cattle feeding country in early January. The hardest hit areas saw weigh-ups at feedlots reduced by 45kg (100 pounds) or more.

Carcase weights began to increase again in mid-February after the weather abated. In fact, they recovered faster than expected and now exceed year-ago levels. Some cattle feeders though have held back cattle to allow them to regain the weight they lost before selling them.

But there is a consequence to this. The economics of adding additional weight favours the producer, with average and marginal gain costs below the selling price of cattle, says Andrew Gottschalk, from HedgersEdge.com.

But this action understates available supplies near-term, while delaying some sales by several weeks. The latter will add to second quarter front-end beef supplies, he says.

7000 head lost in Texas wildfires

Meanwhile, Texas cattle producers are counting the cost of the largest wildfire in the state’s history. Texas officials says the recent fires burnt more than 1.79 million acres of land, killed 7000 cattle and destroyed homes, barns, fences and other infrastructure.

When the fire started, it moved slowly but by February 27, the wind picked up and shifted direction. Electricity was lost, which caused a problem with pumping water needed to fight the fires. Texas A&M Forest Service investigators on March 7 said the fire was ignited by power lines belonging to a utility provider.

The impact of the fires on US cow-calf herds might last years, say officials. Ranchers in the Texas Panhandle also lost many hundreds of miles of fencing that will have to be replaced. They also face more than one million acres of fire-damaged or destroyed pasture, in the Smokehouse Creek fire alone.

But the cattle losses will have little impact on US cattle or beef prices.

The state of Texas is home to 4.115 million beef cows. More than 85pc are in the panhandle, says Texas Agriculture Commissioner Sid Miller. The state’s cattle business is worth an estimated US $15.5 billion. This makes it by far the most profitable agricultural commodity in the state, says the Texas Agriculture Department.

There are millions of cattle across the Panhandle specifically, with some counties counting more cattle than people among its residents, says the department. The losses could be catastrophic for those counties, with some farmers and ranchers losing everything, says Miller.

Farmers and agricultural experts say the legacy of the wildfire will continue to affect the Texas cattle industry for years to come. In addition to the short-term effects of cattle killed and grievously injured by the flames, there will be lasting repercussions, as herds cultivated for years struggle to recover and traumatised cows fail to reproduce.

There’s no grass or water for the livestock, says Miller. There are cows that survived the fires but which will have to be euthanised because of the damage to their hooves and their udders, he says.

The Texas Panhandle is also home to the most concentrated cattle feeding region in the world. However, feedlots appear to have avoided damage or cattle deaths. Cattle were primarily affected by smoke and feedlots were working with veterinarians to ensure that affected cattle returned to good health.

Despite how challenging the wildfire will be for Texas ranchers, it is unlikely to have a significant effect on beef prices, says David Anderson of Texas A&M University.

The number of affected cattle is small compared to the total population across the US. If the fire hits a rancher’s land, it’s a huge disaster for that individual. But he does not expect to see price effects to consumers because of this, he says.

The cruel irony is that the conditions that set off the fires came after the federal Drought Monitor for the period ending February 20 revealed that only 15pc of the nation’s cattle herd was in a drought area, versus 53pc a year ago.

This holds the key to the level of cow slaughter and heifer retention for this year, says Gottschalk.

Similarities with 2014-16 period

There are similarities to the 2014-2016 period, which triggered US herd expansion. Given an improved grazing outlook, he expects heifer retention to begin this year. But this change from last year will further restrict the available feeder cattle and calf supply for placement into feedyards, he says.

Meanwhile, there remain concerns about how beef demand will perform this year, as it will determine everything from packer margins, or lack of them, to price levels for all classes of cattle.

This year has begun, as 2023 ended, with cattle producers and feeders firmly in the driver’s seat. This is because the US cattle herd on January 1 was the smallest since 1951. Beef demand in 2023 performed better than expected in the face of food price inflation. But inflation persists and might have a negative impact on beef sales at both retail and foodservice levels.

One of the issues so far this year is that cutout values failed to reach the US$300 per cwt level despite sharply reduced slaughter and beef production levels. Total slaughter to the week ended March 8 was an estimated 5.938 million head. This was down 5.2pc or 218,000 head on the same period last year.

Beef export sales meanwhile have been erratic so far this year. They peaked at 18.3pc of total sales the week ended January 26 but fell back to only 9.6pc two weeks ago.